Russia Cools Unrest At Economy's Expense

Costly Subsidies Applied Unwisely

May 22, 1994|By James P. Gallagher, Tribune Staff Writer.

SHARYPOVO, Russia — The yawning, dust-blown open-pit coal mine here is one of a handful of places in Russia where coal can be produced at a profit, but shortsighted government policies could force it out of business.

But 200 miles west, at the inefficient Kemerovo coal fields, the future appears more secure because the government is propping up operations there with emergency subsidies it can scarcely afford.

The contrast between Moscow's stony indifference to the Berezovsky open-pit mine and the pampering of angry workers at the Kemerovo complex brings into sharp focus the new political priorities of Russia's ever-more-cautious government.

Four months after the advocates of "shock therapy" were replaced in the Cabinet by self-styled pragmatists with close links to the old industrial bosses, the government has no real economic policy and just one overriding political objective-to defuse discontent before it gets out of hand.

"Politics is driving economic policy today," complained Vladimir Sichev, general director of the Berezovsky pit in eastern Siberia. "The government is determined to keep the lid on political unrest. It only pays attention to serious political problems at the expense of sound economic planning.

"It makes sense that whatever subsidies there are should be given to profitable mines like ours. But because we're so efficient, we only need 3,200 miners. It's a lot safer for the government to ignore us than rile up the 60,000 miners at Kemerovo."

This emphasis on maintaining civil peace may not be to Sichev's liking. But after the extremists' strong showing in legislative elections in December, many would argue that maintaining political calm must come first because it is the underpinning for any future economic transformation.

Thus, what money the government has at its disposal is being used to put out political brush fires that could spread and jeopardize Russia's struggling democracy, not to foster promising businesses that could play a major role in crafting a healthy new economy.

Last year, Sichev says his mine produced 7 million tons of coal while Kemerovo produced only 2 million tons. But when the Kemerovo miners threatened to strike, Moscow came across with just enough concessions to keep them out of the streets. These miners have a long history of activism, including noisy support for Boris Yeltsin at crucial moments in his political career.

On the other hand, when miners threaten walkouts at Berezovsky and two other open-pit mines in the southern Krasnoyarsk region, the government pays little attention.

Like workers all over Russia, these coal miners go months without being paid, and have to accept food and other consumer goods in lieu of hard cash.

Some miners staged a wildcat one-day walkout last month against the advice of their union leaders. But when an emergency meeting was called to find solutions to the crisis, coal officials from Moscow failed to attend, Sichev said.

"Our government today is made up of people without common sense," Sichev said. "What good will it do our country if profitable coal mines are forced to close and the state has to prop up unprofitable ones with subsidies in the years to come?"

Actually, Prime Minister Viktor Chernomyrdin and his new Cabinet have been a pleasant surprise to many Western critics who predicted runaway inflation after Yegor Gaidar, Boris Fyodorov and other shock-therapy proponents left the government in a huff earlier this year.

Those fears were fueled by suggestions from some new Cabinet members that massive subsidies could soon be lavished on thousands of faltering enterprises, including giant state and collective farms.

If the Cabinet ever gave serious attention to such extravagant strategies, it quickly moved on to more sober positions. Thanks to the government's tight-fisted policies-spurred in no small part by shrinking tax revenues-inflation has hovered around 10 percent in recent months.

Even more impressive, Chernomyrdin's government has managed to maintain civil peace at a time when large enterprises are stumbling to a halt and millions of workers are faced with being fired or laid off indefinitely.

Moscow has worked hard to co-opt the issues that worked so well for extreme nationalist Vladimir Zhirinovsky in December, employing a softer tone on economic reform and a more strident one in international affairs-to soothe the battered patriotic pride of many Russians who resent their country's tumble from superpower status.

"The government is letting the industrial dinosaurs slide slowly into the mudpits of bankruptcy, just like Gaidar and Fyodorov wanted," one Western economics expert said. "But unlike Gaidar and Fyodorov, who were terrible politicians and antagonized everybody, Chernomyrdin is more clever and crafty.